Small Businesses Join Lawsuit Against Yelp

Nine small businesses have joined a lawsuit accusing local business review start-up Yelp Inc. of extortion and fraudulent business practices.

Associated Press

The augmented-reality feature of the Yelp iPhone application, known as Monocle, is demonstrated in San Francisco.

The newest plaintiffs were officially added Tuesday in an amended complaint filed by two law firms, the Weston Firm of San Diego and Beck & Lee Business Trial Lawyers of Miami. The new plaintiffs include a Chicago bakery, a Washington, D.C., restaurant and a California furniture store, among others.

The original plaintiff in the putative class action suit, a veterinary hospital in Long Beach, Calif., said it had asked Yelp to remove a negative consumer review that violated Yelp’s site guidelines. According to the complaint, San Francisco-based Yelp initially removed the review but it reappeared and Yelp later declined to remove it and other negative reviews. The suit alleges that Yelp’s sales representatives repeatedly contacted the hospital offering to hide any negative reviews if it bought advertising from Yelp.

In the amended complaint, the owner of Chicago’s Bleeding Heart Bakery alleged that Yelp offered in exchange for a paid sponsorship to push any bad reviews to the end of the bakery’s listings on Yelp’s site. The bakery owner alleged that one of Yelp’s sales representatives said they would personally remove reviews identified by the owner as “bogus.”

“Yelp’s practices are extortionate and especially harmful to small businesses, such as our clients, who are particularly vulnerable to reviews posted on the site,” said Jared H. Beck, co-managing partner of Beck & Lee, referring to the original plaintiff and the nine new ones.

Yelp denied any wrongdoing and said that it reviewed the amended complaint and still believes the suit is without merit. “The allegations stem from confusion over how our review filter works to protect consumers from fake, or shill, reviews and businesses from malicious reviews from competitors,” said Vince Sollitto, Yelp’s vice president of communications.

After the lawsuit was originally filed last month in U.S. District Court, Yelp chief executive Jeremy Stoppelman responded on the company’s official blog: “There has been a long history of people accusing Yelp of monkeying around with reviews in exchange for money. The allegations are disappointing, not only because they are false, but because they ignore empirical evidence in favor of conspiracy theories.”

The East Bay Express newspaper last year ran an article carrying similar allegations that Yelp sales reps tried to get money out of local business owners in exchange for minimizing negative ratings on the site. Yelp at the time called that story inaccurate.